Newspaper article The Journal (Newcastle, England)

Slump in Profits as Bar Group Invests in Its Clubs

Newspaper article The Journal (Newcastle, England)

Slump in Profits as Bar Group Invests in Its Clubs

Article excerpt

Byline: By Nigel Stirling

A pounds 1m pay-off to its five former directors and a write-down in the value of its trading estate pushed bar and night club operator Ultimate Leisure into the red to the tune of pounds 3.5m in the year to the end of June.

The Newcastle-based owner of bars including Chase, The Attic and BluBambu, blamed a 10.8% drop in turnover to pounds 32.5m on "challenging market conditions and significant re-investment in the business".

Operating profits before exceptional charges, including a pounds 3.9m "impairment charge" on a number of properties, slumped by 73% from pounds 8.9m to pounds 2.4m as the group continued to invest in its 35-strong estate.

Trading in the 10 weeks since the end of June had improved marginally, with turnover down 8%, but up 1% on the company's refurbished bars and clubs, after pounds 3.3m of investment in the last 12 months.

The June year-end figures were in line with revised expectations set out in January and July this year, when Ultimate Leisure also cited under-investment by the previous management for its woes.

The former directors, who received nearly pounds 1m in compensation during the period for the early termination of contracts, resigned following a boardroom coup in August last year after clashing with major shareholders about Ultimate Leisure's future direction.

Chairman Mark Jones yesterday said the company retained the full backing of its shareholders and banks despite the dismal trading results of the past 12 months.

He said: "In the last 12 months we have refurbished 22 sites, and in the first 10 weeks of this year we have re-opened seven venues after extensive refurbishments.

"In the last two years we will have spent pounds 6.9m on capital expenditure, including pounds 3.3m on our existing estate in the last year, and another pounds 1.5m in the first 10 weeks of the new [financial] year. …

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